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The ninth day of May last year saw the end of an era – the country’s biggest law firm, Amarchand Mangaldas Suresh A. Shroff, was dissolved. The dissolution marked the end of the family feud between brothers Shardul Shroff and Cyril Shroff following the death of their mother, Bharati Shroff.
The country’s largest law firm was now replaced with two, new firms – Cyril Amarchand Mangaldas and Shardul Amarchand Mangaldas & Co. Naturally, this was followed by significant churn in the law firm market; not only were there a number of aggressive hires but a complete restructuring of firm management as well.
More than a year later, things seem to have settled down.
The end of the year-long period also marks the end of the “non-poach” agreement between the two.
Bar & Bench’s Pallavi Saluja spoke with Cyril Shroff about the firm’s first year, management of the firm, growth plans, vision for the firm, entry of foreign firms and much more.
Pallavi Saluja: One year of Cyril Amarchand Mangaldas – Three of the most significant learnings?
Cyril Shroff: It is ironic that 11th May is the first year of Cyril Amarchand Mangaldas (CAM) but not one year of the “dissolution” of the erstwhile Amarchand & Mangaldas & Suresh A. Shroff & Co. (AMSS). AMSS in reality came to an end, on 14th November 2014 when the litigation was filed in the Bombay High Court.
There was no way it could have continued thereafter in a combined format. AMSS now seems like a distant memory and we are moving forward with the positive legacy. There is some nostalgia about AMSS but we have really moved far beyond in a positive way. We are focused on the future and not the past.
Whilst it has undoubtedly had its challenges, it has been a satisfying year. Satisfying because, we have been able to transit the legacy and the reputational franchise seamlessly, both internally and externally.
We have grown in headcount – we are now about 625 lawyers net of attritions and are coming close to the original size of AMSS. We have topped the relevant league tables whether on M&A, IPO or financings. The data and performance speaks for itself.
And whilst we have some features of a startup and also the legacy of a 100 year old institution, there are key learnings to be imbibed from the first year. Three of my most significant learnings are – “focus on profitability, focus on profitability and focus on profitability”. In this market, there is no point in pursuing growth without a focus on the bottom line. We have redefined our priorities. We have reoriented our thinking to capture this key learning. We are also focusing a lot on our people and on culture.
Pallavi: You have recently appointed National Practice Heads and reduced from 15 committees to 3 committees. What was the thought process behind that?
Cyril Shroff: In early 2015 we adopted a new constitution in the form of a modern partnership deed when CAM was formed. The appointment of National Practice Heads as also the Core Advisory Group in phase 1 (first 5 years) was provided in the 2015 constitution itself.
It is not a new idea. This is the progressive implementation of a 2015 idea that was to be applied from 2016.
The reduction of 15 committees into two committees was decided in January/February 2016. The idea behind the same was fairly simple. To broadbase governance and share responsibility. Too many committees did not serve the purpose and many of the tasks were becoming nobody’s baby. For more effective broadbasing it is better to have a few smaller committees and spreading the responsibility amongst other equity partners of the firm. And have more accountability. We think this is going to work well. The partners are very excited and ready for the responsibility.
In phase 2, we will be having a formal Partnership Committee.
Pallavi: You had set up with a single leader model – Would you continue with the same model? How will you broadbase?
Cyril Shroff: A single managing partner model, i.e. single leader model is not inconsistent with the model of many other domestic competitors or for that matter even large global firms including Magic Circle firms. Even large corporates have it. The single leader model does not conflict with broadbasing responsibility with the help of committees and regional leaders. That is exactly the model that we are following.
So, I think that the correct description of our current governance model is ‘single leader combined with broadbased responsibilities’. It is already broadbased. I think this combination will work well as it will help me share the burden with other capable partners. They are looking forward to and have already embraced the new responsibilities both at the firm governance as well as on practice governance as national practice leaders. Our national practice leaders will have to manage a P&L.
So, I think we have evolved already and will continue to evolve. The general direction of travel being broadbasing in a calibrated way as per the needs of the firm. We have a ambitious and supportive partnership.
Pallavi: This year, the focus has been Delhi and Ahmedabad. Do you plan to open any other offices?
Cyril Shroff: We do not plan to open any other offices. It is too narrow to say that the focus has been on Delhi and Ahmedabad. We are distributing our attention also to Mumbai and the South. As a national firm, we need to pay attention to all regions. The firm was founded in Mumbai and Mumbai will always get a lot of attention. It is the mother ship. We are trying to build a one firm culture and through practice integration. We are going to run our practices on national and not regional lines.
Pallavi: Coming back to Delhi, when do you think Delhi will break even? What are your readings of the Delhi litigation market?
Cyril: Delhi is a very promising market and an important market. We are confident of being profitable in this financial year 2016-17.
Typically any new business or new unit to be profitable requires a 1,000 days. We think we will do this much faster because of the national firm idea. We have also changed the metric of measuring performance. We are going to measure performance along practice lines and not along regional lines.
So, the question of ‘Delhi’ being profitable or otherwise is somewhat moot as we are moving from a horizontal to a vertical axis for the firm. It is a hard process. But we are well on our way. We are putting in a lot of effort in integration in achieving national alignment.
I think “Disputes” will be to Delhi, what “Corporate” is to Mumbai. Delhi is the litigation capital of the country.
Pallavi: The entire Delhi office has been built on aggressive lateral hiring. How has the integration been within Delhi and with other offices?
Cyril Shroff: Whilst any recruitment built on aggressive lateral hiring will face initial challenges as did we, I think this is behind us. We are a nimble firm and hence make corrections swiftly. There is an impetus in the firm for integrating all offices. The recent announcement of national practice lines will fast track such integration. There is a lot of discussion across offices regarding joint business development, knowledge sharing, working together and more camaraderie. This is already happening as we speak.
Pallavi: The informal no-poach between Cyril Amarchand Mangaldas, AZB Mumbai and JSA – Is this the end of this agreement?
Cyril Shroff: The reality is that there is now an active lateral market with no restrictions. All firms are subject to poaching and themselves poach from others.
As far as JSA is concerned, as a matter of self-restraint, we will not actively poach from them. Our headhunters are under instructions not to poach from JSA. There is no restriction whatsoever with any other firm.
Pallavi: You have lately hired quite a few in-house lawyers. What value addition do these in-house lawyers bring to the firm?
Cyril Shroff: If you are referring to Shagoofa Khan and Ruetvij Pandya, they have been in private firms for a while. I think they will bring tremendous market insight especially since they come from very sophisticated institutions and are experts in their field. I think they will help us in understanding the needs of a modern complex client better. We have in the past also had in-house lawyers such as Mr. S.H. Bhojani. It has worked brilliantly. Hiring appropriate in-house talent with expertise also makes commercial sense.
Pallavi: You have a strong presence in the South. Do you have any further expansion/growth plans?
Cyril Shroff: You are right – we do have a strong presence in the South. If our South offices were a separate firm, they would be the largest law firm in the South. Yes, indeed we will continue to grow selectively but the main focus will be on Bangalore. We will also keep profitability in mind and not grow only for the sake of expansion. The Southern economy is growing faster than the northern economy. Therefore it makes sense for us to expand the Southern practice. Bangalore also has links with the West Coast in America. We will continue to groom and recruit strong professionals in the South.
Pallavi: The law firm market has seen quite a bit of disruption post the split. Where do you see the market in next 2-3 years?
Cyril Shroff: The split of AMSS was a disruptive event. However, I think we are seeing the tail end of the disruption in ‘big law’. At the time of the split, there were about 75-100 new partner jobs that suddenly got created because of the split and its secondary effects. That is surely not the case today and I think that the lateral market is saturated. We will still see some lateral movements on a selective basis. The big disruption is currently behind us since all firms are now in the consolidation mode.
I think the market will consolidate in the next 2 – 3 years. In my view, the larger firms will now focus on quality and profitability and are unlikely to pursue growth for its own sake, especially in such a hyper competitive market for client and work. It is possible that there could be one or two maverick firms which may pursue a different strategy at their own risk. The reality is that the market needs to consolidate for a bit as too much continuous change is not good.
Pallavi: In this market, how does one reduce attrition? Do you see a change in the partnership track?
Cyril Shroff: Attrition is not a bad thing. Some attrition is actually a healthy thing for firms. There is nothing like good attrition and bad attrition. It is a way of life and every firm will face it at some point. Attrition has also created space for attracting excellent talent.
It is therefore important to keep the core of the firm intact. This ties in with the need to maintain a high level of profitability. This means charging properly and also managing talent costs in a pragmatic way.
The partnership track in most firms is around 7 – 9 years and I think it will still remain in that ballpark with some firm by firm variations.
Pallavi: Entry of foreign law firms. Now that it’s inevitable. Do you see it as a threat/challenge/ opportunity?
Cyril Shroff: Following the advice of Confucius, it is better to face the inevitable and to embrace it. If liberalization is done in a structured and transparent way by involving all stake holders, I actually see it as a huge opportunity for all and would welcome it. It will be a “growing up moment” for the profession and a lot of the current immaturity may come to an end.
Pallavi: Your general thoughts on the future vision for the firm?
Cyril Shroff: My vision for this firm has been fairly public since several years. It has not fundamentally changed. It is based on pursuing a strategy of independence and positioning oneself as the “national champion”. This involves a focus on quality, right size, breadth of practice, modernity and an increased focus on profitability.
Every firm leader has a vision for their firm. In my own humble way I would like to continue to strive towards making this firm as the top destination for the best talent and the best work. It is a firm with a 100 year old history and has been at the forefront of the market for several decades. I want to create an institution that is built on values and has a clear identity for what it stands for in the Indian legal market. It must have longevity. It must outlast me and keep performing at the same level always.
I want to keep it at the top and preserve the essential DNA that got us here. I see no reason why that should change at this moment, or, even if liberalization were to occur.
The vision of the firm is closely aligned with the vision of the country. As India becomes increasingly prominent in the world markets, so will the Indian legal market and I hope that we can get our fair share of that.
One thing is for sure – we intend to be around for a long time as a key player in the legal market and are very focused on building a long term institution with a national footprint.
Pallavi: Your vision for the Indian legal market?
Cyril Shroff: The modern Indian legal market is technically about 20 years old since the early 90’s. Realistically speaking, it is about 15–16 years old since the emergence of the ‘modern law firm’ which was spearheaded by the erstwhile AMSS. We created the first template for the modern Indian law firm and will always be the leader in innovation. I had a big role to play in that.
The legal market is like a teenager. It is experiencing adolescent challenges and is in the process of maturing into adulthood like the more mature legal markets in the West. These include use of modern management techniques, a more mature partnership culture and the emergence of a few solid institutions who will continue to stay relevant even after liberalization. These are perhaps some of the key features of the vision that require work on.
More importantly, there is need for real leadership in the profession as it goes through a turbulent phase of evolution. It is important for the market as a whole to identify a set of goals for itself over the next 3-5 years. Law firm leaders will have to self-regulate themselves to move forward systematically by creating durable institutions and by creating a vibrant Indian legal market that befits such a large nation.
I think the Indian legal market will be one of the largest, broadest and deepest markets in the world (outside UK and USA) ten years from now with large and sophisticated institutions and a more mature law firm culture.
Personally, I believe that this would be the case and I certainly intend to do my bit for the same.